UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 1, 2021

or 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-15723

UNITED NATURAL FOODS, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	05-0376157 (I.R.S. Employer Identification No.)
313 Iron Horse Way, Providence, RI 02908
(Address of principal executive offices) (Zip Code)

 Registrant’s telephone number, including area code: (401) 528-8634

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, par value $0.01	UNFI	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:  Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.     

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒

As of June 4, 2021 there were 56,349,864 shares of the registrant’s common stock, $0.01 par value per share, outstanding.

TABLE OF CONTENTS

Part I.	Financial Information
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets (unaudited)	3
	Condensed Consolidated Statements of Operations (unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited)	5
	Condensed Consolidated Statements of Stockholders’ Equity (unaudited)	6
	Condensed Consolidated Statements of Cash Flows (unaudited)	8
	Notes to Condensed Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 4.	Controls and Procedures	50
Part II.	Other Information
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 5.	Other Information	50
Item 6.	Exhibits	52
	Signatures	53

2

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

UNITED NATURAL FOODS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(In thousands, except for per share data)

	May 1, 2021		August 1, 2020
ASSETS
Cash and cash equivalents	$	39,495	$	46,993
Accounts receivable, net	1,106,578		1,120,199
Inventories, net	2,293,877		2,280,767
Prepaid expenses and other current assets	140,948		251,891
Current assets of discontinued operations	4,899		5,067
Total current assets	3,585,797		3,704,917
Property and equipment, net	1,715,034		1,701,216
Operating lease assets	1,088,058		982,808
Goodwill	20,495		19,607
Intangible assets, net	909,590		969,600
Deferred income taxes	105,332		107,624
Other long-term assets	95,088		97,285
Long-term assets of discontinued operations	1,430		3,915
Total assets	$	7,520,824	$	7,586,972
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	1,599,995	$	1,633,448
Accrued expenses and other current liabilities	259,702		281,956
Accrued compensation and benefits	235,677		228,832
Current portion of operating lease liabilities	138,844		131,022
Current portion of long-term debt and finance lease liabilities	23,700		83,378
Current liabilities of discontinued operations	6,996		11,438
Total current liabilities	2,264,914		2,370,074
Long-term debt	2,314,215		2,426,994
Long-term operating lease liabilities	976,691		873,990
Long-term finance lease liabilities	132,975		143,303
Pension and other postretirement benefit obligations	236,927		292,128
Other long-term liabilities	294,025		336,487
Long-term liabilities of discontinued operations	15		1,738
Total liabilities	6,219,762		6,444,714
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value, authorized 5,000 shares; none issued or outstanding	—		—
Common stock, $0.01 par value, authorized 100,000 shares; 56,956 shares issued and 56,341 shares outstanding at May 1, 2021; 55,306 shares issued and 54,691 shares outstanding at August 1, 2020	570		553
Additional paid-in capital	588,324		568,736
Treasury stock at cost	(24,231)		(24,231)
Accumulated other comprehensive loss	(197,092)		(237,946)
Retained earnings	934,871		837,633
Total United Natural Foods, Inc. stockholders’ equity	1,302,442		1,144,745
Noncontrolling interests	(1,380)		(2,487)
Total stockholders’ equity	1,301,062		1,142,258
Total liabilities and stockholders’ equity	$	7,520,824	$	7,586,972

See accompanying Notes to Condensed Consolidated Financial Statements.

3

UNITED NATURAL FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(In thousands, except for per share data) 

	13-Week Period Ended				39-Week Period Ended
	May 1, 2021		May 2, 2020		May 1, 2021		May 2, 2020
Net sales	$	6,619,842	$	7,031,718	$	20,180,582	$	19,759,712
Cost of sales	5,653,043		5,981,486		17,256,925		16,884,944
Gross profit	966,799		1,050,232		2,923,657		2,874,768
Operating expenses	866,463		911,007		2,634,305		2,657,427
Goodwill and asset impairment charges	—		—		—		425,405
Restructuring, acquisition and integration related expenses	9,867		14,557		44,078		65,751
(Gain) loss on sale of assets	(25)		351		144		785
Operating income (loss)	90,494		124,317		245,130		(274,600)
Other expense (income):
Net periodic benefit income, excluding service cost	(17,128)		(12,758)		(51,288)		(27,419)
Interest expense, net	43,500		47,269		163,577		145,814
Other, net	(989)		(1,842)		(3,461)		(3,462)
Total other expense, net	25,383		32,669		108,828		114,933
Income (loss) from continuing operations before income taxes	65,111		91,648		136,302		(389,533)
Provision (benefit) for income taxes	16,812		(2,799)		32,213		(82,562)
Net income (loss) from continuing operations	48,299		94,447		104,089		(306,971)
Income (loss) from discontinued operations, net of tax	1,653		(4,078)		6,752		(16,128)
Net income (loss) including noncontrolling interests	49,952		90,369		110,841		(323,099)
Less net income attributable to noncontrolling interests	(1,394)		(2,238)		(4,366)		(3,407)
Net income (loss) attributable to United Natural Foods, Inc.	$	48,558	$	88,131	$	106,475	$	(326,506)
Basic earnings (loss) per share:
Continuing operations	$	0.83	$	1.72	$	1.78	$	(5.80)
Discontinued operations	$	0.03	$	(0.08)	$	0.12	$	(0.30)
Basic earnings (loss) per share	$	0.86	$	1.64	$	1.90	$	(6.10)
Diluted earnings (loss) per share:
Continuing operations	$	0.77	$	1.67	$	1.67	$	(5.80)
Discontinued operations	$	0.03	$	(0.08)	$	0.11	$	(0.30)
Diluted earnings (loss) per share	$	0.80	$	1.60	$	1.78	$	(6.10)
Weighted average shares outstanding:
Basic	56,458		53,718		56,028		53,485
Diluted	60,539		55,217		59,676		53,485

See accompanying Notes to Condensed Consolidated Financial Statements.

4

UNITED NATURAL FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)

(In thousands)

	13-Week Period Ended				39-Week Period Ended
	May 1, 2021		May 2, 2020		May 1, 2021		May 2, 2020
Net income (loss) including noncontrolling interests	$	49,952	$	90,369	$	110,841	$	(323,099)
Other comprehensive income (loss):
Recognition of pension and other postretirement benefit obligations, net of tax(1)	(301)		(574)		(807)		7,368
Recognition of interest rate swap cash flow hedges, net of tax(2)	14,127		(39,066)		35,838		(46,499)
Foreign currency translation adjustments	2,907		(3,585)		6,164		(3,561)
Recognition of other cash flow derivatives, net of tax(3)	(296)		—		(341)		—
Total other comprehensive income (loss)	16,437		(43,225)		40,854		(42,692)
Less comprehensive income attributable to noncontrolling interests	(1,394)		(2,238)		(4,366)		(3,407)
Total comprehensive income (loss) attributable to United Natural Foods, Inc.	$	64,995	$	44,906	$	147,329	$	(369,198)

(1)Amounts are net of tax (benefit) expense of $(0.1) million, $(0.2) million, $(0.3) million and $2.4 million, respectively.

(2)Amounts are net of tax expense (benefit) of $4.8 million, $(13.4) million, $12.3 million and $(15.9) million, respectively.

(3)Amounts are net of tax benefit of $(0.1) million, $— million, $(0.1) million and $— million, respectively.

See accompanying Notes to Condensed Consolidated Financial Statements.

5

UNITED NATURAL FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

For the 13-week periods ended May 1, 2021 and May 2, 2020

(In thousands)

	Common Stock			Treasury Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total United Natural Foods, Inc. Stockholders’ Equity		Noncontrolling Interests		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balances at January 30, 2021	56,763	$	568	615	$	(24,231)	$	581,096	$	(213,529)	$	886,313	$	1,230,217	$	(1,151)	$	1,229,066
Restricted stock vestings	163	2		—	—		(3,054)		—		—		(3,052)		—		(3,052)
Share-based compensation	—	—		—	—		9,918		—		—		9,918		—		9,918
Other comprehensive income	—	—		—	—		—		16,437		—		16,437		—		16,437
Distributions to noncontrolling interests	—	—		—	—		—		—		—		—		(1,622)		(1,622)
Proceeds from issuance of common stock, net	30	—		—	—		514		—		—		514		—		514
Acquisition of noncontrolling interests	—	—		—	—		(150)		—		—		(150)		(1)		(151)
Net income	—	—		—	—		—		—		48,558		48,558		1,394		49,952
Balances at May 1, 2021	56,956	$	570	615	$	(24,231)	$	588,324	$	(197,092)	$	934,871	$	1,302,442	$	(1,380)	$	1,301,062
Balances at February 1, 2020	54,175	$	542	615	$	(24,231)	$	535,900	$	(108,420)	$	691,640	$	1,095,431	$	(2,966)	$	1,092,465
Restricted stock vestings	21	—		—	—		(143)		—		—		(143)		—		(143)
Share-based compensation	—	—		—	—		11,137		—		—		11,137		—		11,137
Other comprehensive loss	—	—		—	—		—		(43,225)		—		(43,225)		—		(43,225)
Distributions to noncontrolling interests	—	—		—	—		—		—		—		—		(1,127)		(1,127)
Proceeds from issuance of common stock, net	1,096	11		—	—		11,844		—		—		11,855		—		11,855
Net income	—	—		—	—		—		—		88,131		88,131		2,238		90,369
Balances at May 2, 2020	55,292	$	553	615	$	(24,231)	$	558,738	$	(151,645)	$	779,771	$	1,163,186	$	(1,855)	$	1,161,331

See accompanying Notes to Condensed Consolidated Financial Statements

6

UNITED NATURAL FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

For the 39-week periods ended May 1, 2021 and May 2, 2020

	Common Stock			Treasury Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total United Natural Foods, Inc. Stockholders’ Equity		Noncontrolling Interests		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balances at August 1, 2020	55,306	$	553	615	$	(24,231)	$	568,736	$	(237,946)	$	837,633	$	1,144,745	$	(2,487)	$	1,142,258
Cumulative effect of change in accounting principle	—	—		—	—		—		—		(9,237)		(9,237)		—		(9,237)
Restricted stock vestings	1,606	17		—	—		(13,466)		—		—		(13,449)		—		(13,449)
Share-based compensation	—	—		—	—		32,847		—		—		32,847		—		32,847
Other comprehensive income	—	—		—	—		—		40,854		—		40,854		—		40,854
Distributions to noncontrolling interests	—	—		—	—		—		—		—		—		(3,082)		(3,082)
Proceeds from issuance of common stock, net	44	—		—	—		721		—		—		721		—		721
Acquisition of noncontrolling interests	—	—		—	—		(514)		—		—		(514)		(177)		(691)
Net income	—	—		—	—		—		—		106,475		106,475		4,366		110,841
Balances at May 1, 2021	56,956	$	570	615	$	(24,231)	$	588,324	$	(197,092)	$	934,871	$	1,302,442	$	(1,380)	$	1,301,062
Balances at August 3, 2019	53,501	535		615	(24,231)		530,801		(108,953)		1,108,890		1,507,042		(2,737)		1,504,305
Cumulative effect of change in accounting principle	—	—		—	—		—		—		(2,613)		(2,613)		—		(2,613)
Restricted stock vestings	464	5		—	—		(1,020)		—		—		(1,015)		—		(1,015)
Share-based compensation	—	—		—	—		15,088		—		—		15,088		—		15,088
Other comprehensive loss	—	—		—	—		—		(42,692)		—		(42,692)		—		(42,692)
Distributions to noncontrolling interests	—	—		—	—		—		—		—		—		(2,525)		(2,525)
Proceeds from issuance of common stock, net	1,327	13		—	—		13,869		—		—		13,882		—		13,882
Net (loss) income	—	—		—	—		—		—		(326,506)		(326,506)		3,407		(323,099)
Balances at May 2, 2020	55,292	$	553	615	$	(24,231)	$	558,738	$	(151,645)	$	779,771	$	1,163,186	$	(1,855)	$	1,161,331

See accompanying Notes to Condensed Consolidated Financial Statements.

7

UNITED NATURAL FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

	39-Week Period Ended
(In thousands)	May 1, 2021		May 2, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) including noncontrolling interests	$	110,841	$	(323,099)
Income (loss) from discontinued operations, net of tax	6,752		(16,128)
Net income (loss) from continuing operations	104,089		(306,971)
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operating activities:
Depreciation and amortization	210,088		214,002
Share-based compensation	32,847		15,088
Loss on sale of assets	144		785
Closed property and other restructuring charges	3,399		36,662
Goodwill and asset impairment charges	—		425,405
Net pension and other postretirement benefit income	(51,252)		(27,419)
Deferred income tax benefit	(2,076)		(17,381)
LIFO charge	18,741		20,463
(Recoveries) provision for losses on receivables, net	(2,672)		44,238
Loss on debt extinguishment	30,373		73
Non-cash interest expense and other adjustments	15,127		10,993
Changes in operating assets and liabilities	(24,438)		33,290
Net cash provided by operating activities of continuing operations	334,370		449,228
Net cash provided by operating activities of discontinued operations	2,074		3,051
Net cash provided by operating activities	336,444		452,279
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for capital expenditures	(165,457)		(126,803)
Proceeds from dispositions of assets	57,329		29,650
Other	(4,111)		(2,380)
Net cash used in investing activities of continuing operations	(112,239)		(99,533)
Net cash provided by investing activities of discontinued operations	1,523		26,503
Net cash used in investing activities	(110,716)		(73,030)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings of long-term debt	500,000		2,050
Proceeds from borrowings under revolving credit line	3,451,529		3,244,573
Proceeds from issuance of other loans	—		6,266
Repayments of borrowings under revolving credit line	(3,368,951)		(3,508,573)
Repayments of long-term debt and finance leases	(787,232)		(111,923)
Proceeds from the issuance of common stock and exercise of stock options	721		5,662
Payment of employee restricted stock tax withholdings	(13,449)		(1,015)
Payments for debt issuance costs	(12,339)		—
Distributions to noncontrolling interests	(3,082)		(2,525)
Repayments of other loans	(163)		—
Other	(691)		—
Net cash used in financing activities	(233,657)		(365,485)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	443		(290)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(7,486)		13,474
Cash and cash equivalents, at beginning of period	47,117		45,263
Cash and cash equivalents, at end of period	39,631		58,737
Less: cash and cash equivalents of discontinued operations	(136)		(120)
Cash and cash equivalents	$	39,495	$	58,617
Supplemental disclosures of cash flow information:
Cash paid for interest	$	118,441	$	139,040
Cash (refunds) for federal and state income taxes, net	(21,847)		(24,236)
Leased assets obtained in exchange for new operating lease liabilities	226,570		154,888
Leased assets obtained in exchange for new finance lease liabilities	468		92,843
Additions of property and equipment included in accounts payable	$	49,182	$	20,547

 See accompanying Notes to Condensed Consolidated Financial Statements.